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Self-storage property fund Stor-Age is set to deliver consistent dividend growth

Net investment property value increased by 22.4 percent to R9.26 billion, aided also by a valuations gain, said Stor-Age CEO Gavin Lucas. Image, Leon Lestrade, ANA.

Net investment property value increased by 22.4 percent to R9.26 billion, aided also by a valuations gain, said Stor-Age CEO Gavin Lucas. Image, Leon Lestrade, ANA.

Published Jun 21, 2022

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Stor-Age, the largest self storage property fund on the JSE, continued its consistent earnings track record following a year of strong operating performance and execution on strategy in the year to March 31.

A final dividend of 55.30 cents per share was declared after distributable income per share increased by 7.5 percent. The dividend for the year was up 5.49 percent to 111.90 cents per share.

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Eleven trading properties were acquired across South Africa and the UK and four new opportunities were secured, taking the total number of properties in the development pipeline to 14.

The company, one of only 11 self storage REITS trading globally, had raised R575 million in an oversubscribed accelerated bookbuild in January. Following strong demand, same-store net property income growth grew by more than 12 percent and 28 percent in South Africa and the UK, respectively.

Occupancy increased by 24 100 square metres, and same-store occupancy closed above 90 percent in both markets. Group rental rose 14 percent to R815m from organic growth, acquisitions and new developments. On a same-store basis, SA and UK rental income were up 10 percent and 21.2 percent respectively.

Net investment property value increased by 22.4 percent to R9.26 billion, aided also by a valuations gain, said Stor-Age CEO Gavin Lucas.

He said their founder-led executive management team, which had been developing and operating self storage assets for more than 15 years, meant the group benefited from their deep sector specialisation, the sophisticated operating platform and “industry leading digital capability in South Africa and the UK.”

“The pandemic accelerated long-term trends and set in motion changes in remote work, e-commerce and automation, giving rise to additional new needs-based demand drivers for self storage. It’s evident some emerging trends, such as hybrid working, have become more permanent and will continue to drive demand and enhance the pricing power within the sector.”

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He said self storage was also likely to continue to benefit from its market positioning as an alternative to traditional industrial and logistics space, as well as from increased use by SMMEs.

In the UK, the three acquisitions Stor-Age completed during the year for more than £100m (R1.9bn) combined were part of a joint venture with Moorfield Group. The portfolio consists mainly of modern, purpose-built properties in the south of England and the West Midlands.

Stor-Age has a 24.9 percent equity interest in the joint venture and earns management fees for acquiring, developing and managing properties therein.

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The Storagebase acquisition followed the acquisition of a regionally dominant four-property portfolio in Yorkshire from McCarthy’s Storage World, in January 2022, for £37.5m.

Stor-Age’s assets were now more than 50 percent weighted to UK assets and continuing to grow, he said.

Three new developments were also completed in South Africa, in Tyger Valley, Cresta and Sunningdale. Another two properties were under construction, in Morningside and Bryanston, as part of a joint venture with Nedbank Corporate and Investment Bank.

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At year end, Stor-Age had a loan-to-value ratio of 27.9 percent, with 84.3 percent of its net debt hedged for a remaining average 3.5 years.

He said Stor-Age’s business model had a record of resilience in tight economic environments, with diverse and deep set of demand drivers present throughout different economic cycles. Its board anticipated low to mid single-digit dividend per share growth for the financial year ahead.

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